There are two segments of stock markets - cash and F&O/derivatives. The cash segment refers to buying/selling of shares at the current market price whereas, in the F&O market, there is an agreement between the two parties to buy/sell the scrips on a future date for a price mutually agreed upon while signing the contract.
A futures contract is a contract where the agreement takes place via a regulated exchange (such as BSE, NSE). Options contracts give the right but not an obligation to buy or sell the underlying asset at the stated date and price, known as ‘strike price'.
Derivatives, in simple terms, means the financial instruments which derive their value from the underlying assets. For example, the underlying assets could be indices such as Nifty, Sensex, Bank Nifty and select stocks in the cash market.
So, to trade in options, it is mandatory to activate the F&O segment.